In general, the financing of R&D projects is based on the principle of shared costs, i.e. the Commission will contribute 50% to the overall project costs. Furthermore, reimbursement rates depend on the particular funding scheme and the respctive activity types within a project. ‎

Full Cost Model

The Full Cost model (FC model) allows all direct and indirect costs to be charged to the project. Costs are reimbursed at different rates according to the activity and instrument. The FC-model is open for all participants with a respective analytic accounting system that are able to report indirect costs, with the exception of physical persons. Large enterprises are obliged to use the FC model.

Full Cost Model with Indirect Flat Rate Costs

The Full Cost model with indirect flat rate (FCF model) allows all direct costs to be charged to the project with a flat rate for indirect costs (20% of all direct eligible costs minus the cost of sub-contracts). Direct costs are reimbursed at different rates according to the activity and instrument.Small and medium sized enterprises (SME) may choose between the FCF and the FC model.

Additional Cost Model

The Additional Cost model (AC model) allows only eligible additional direct costs to be charged to the project with a flat rate to cover indirect costs (20% of all eligible direct additional costs minus the cost of sub-contracts) . These costs are reimbursed at 100% in all instruments (exception for Networks of Excellence). The AC model is only available for public bodies and international organisations not having an analytic accounting system. Physical persons are obliged to use the AC model.

Changing to another Cost Model

A contractor must apply the same cost reporting model in all contracts established under the 6th Framework Programme. However, participants can change from the AC model to the FC or FCF model or from FCF to FC in a later contract. If they do so, they must then use the new cost reporting model in subsequent contracts.